COMPANY NEWS

COMPANY NEWS; Cable Group Seeks Deal With Sprint

By EDMUND L. ANDREWS,

Published: October 11, 1994

Correction Appended

WASHINGTON, Oct. 10—
A group of the nation's biggest cable television companies is talking with the Sprint Corporation, the nation's third-largest long-distance carrier, about collaborating on a nationwide wireless telephone network.

It remains unclear whether such an agreement can be reached, and the talks come at a time when every company with aspirations in wireless communications is talking with almost everyone else about some sort of national alliance.

But as a practical matter, the companies have less than three weeks to make a decision. That is because the Federal Communications Commission, which plans to auction radio licenses for new wireless services in December, has ordered all the potential bidders to register and disclose their alliances by Oct. 28.

The cable companies -- which include Tele-Communications Inc. of Denver; Cox Enterprises of Atlanta; the Comcast Corporation of Philadelphia and Continental Cablevision of Boston -- all want to compete in the telephone market but are looking for partners with well-known brand names, experience and money.

Sprint has a strong brand name and already owns a big collection of cellular telephone properties as a result of its acquisition of Centel Cellular in 1992. Sprint wants to develop its own nationwide wireless system to match the AT&T Corporation's recent acquisition of McCaw Cellular Communications Inc.

People familiar with the talks confirmed today that Sprint had broken off negotiations with the Bell Atlantic Corporation and the Nynex Corporation, which have pooled their own cellular properties and are also racing to build a national wireless system. The new talks were first disclosed today by The Wall Street Journal.

But analysts say a deal between Sprint and the cable companies would hardly be a marriage made in heaven. The cable companies have far less capital to invest than the Bell companies, because they are smaller than the Bells and many have already borrowed heavily to finance their own growth. Beyond that, most of the potential cable partners would be starting from scratch in wireless communications, while the telephone companies are already big cellular operators.

The new licenses are likely to cost hundreds of millions of dollars each, even before the companies spend any money to build the systems.

Sprint's chief executive, William T. Esrey, is also known as a tough negotiator who is not beyond playing rival bidders off one another.

"There's an awful lot of bargaining going on right now," said Blake Bath, a telecommunications analyst at Sanford Bernstein & Company. "It's not clear to me whether the recently disclosed discussions are anything more than a negotiating tactic."

But one person familiar with the talks said there were several attractions for Sprint in a deal with cable television operators. One is that Sprint faces fewer potential conflicts with cable television partners than it would with the Bell companies.

Like every other long-distance carrier, Sprint is perpetually at odds with the regional Bell companies because it depends on the Bells' local telephone networks to reach its customers. Sprint and the other long-distance carriers are all edging back into the local markets and are looking for new ways to bypass the Bells and their hefty "access charges," which the long-distance carriers pay to the local phone companies for originating and terminating phone calls.

But the entire industry is playing a high-stakes game of musical chairs, and the positions of several large participants are still in flux. The MCI Communications Corporation, the nation's second-largest long-distance carrier, recently abandoned its wireless alliance with Nextel Comunications Inc. and is believed to be talking to the same potential partners as Sprint.

Time Warner Inc., the nation's second-largest cable television operator, has been especially eager to bid on the new F.C.C. licenses.

And the plans of several other Bell companies, which will affect the strategies of all the other companies for wireless telephone service, are also unclear. Bell Atlantic, for example, has been courting Pacific Telesis, which owns Pacific Bell, as well as Ameritech in Chicago.

Correction: October 15, 1994, Saturday An article in Business Day on Tuesday about the Sprint Corporation's discussions with a group of big cable television companies on a proposed wireless telephone network misidentified the publication that disclosed the talks. The industry trade magazine Inside Media reported them on Oct. 7, before The Wall Street Journal.